GRAEME GOODINGS:
Joining me now is Treasurer Josh Frydenberg. Treasurer, thanks for joining us the morning. How will the tax cuts work?
JOSH FRYDENBERG:
Well, if you’re on $60,000 – say a nurse or a teacher – you will pay $2,160 less tax this year compared to under the Labor government. What these taxes do is enable Australians to keep more of what they earn. They encourage aspiration and they’re consistent with the election commitment that we took back in 2019 to the Australian people. So we’re going to end up with a lot stronger, fairer, better tax system. We’re abolishing a whole tax bracket – the 37 cents in the dollar tax bracket – and 95 per cent of taxpayers will pay a marginal rate of no more than 30 cents in the dollar.
GRAEME GOODINGS:
Now will these cuts all come in at once or be phased in over the year?
JOSH FRYDENBERG:
Well, over the last six months, in the back half of last year, we saw 11.7 million Australians get over $15 billion worth of tax relief. We’re expecting an extra $1.5 billion of tax cuts to flow through every month over the course of this financial year. So that’s more money into people’s pockets, focusing on low and middle‑income earners. And it is also, you know, rewarding that effort, which I said is going to be so important to our economic recovery.
GRAEME GOODINGS:
Can the country afford it in the current economic climate?
JOSH FRYDENBERG:
Well, I actually think tax cuts is good economic policy because they generate more economic activity. And more money into people’s pockets is ultimately spent across the economy. And that’s good news for jobs. And our focus is on creating more jobs. As you know, Graeme, unemployment, despite the recession that we’ve been through, is now at 4.6 per cent, around a 13‑year low. And that has been very different to the experience that Australia had during both the 80s and the 90s recessions where it took between 8 and 10 years for the unemployment rate to get back to below where it started. Whereas the unemployment rate today at 4.6 per cent compares to 5.7 per cent when Labor left office. So our focus is on creating jobs, and tax cuts help do that.
GRAEME GOODINGS:
Looking at statistics from Deloitte Access Economics, they say due to COVID, Australia’s economic growth will be 4 per cent down from the 5.5 per cent predicted by the Reserve Bank. Have you factored that in?
JOSH FRYDENBERG:
Well, actually this is an interesting report from Deloitte, because they’ve actually pointed to increasing their own economic growth forecasts for this financial year. They say the unemployment rate is expected to continue to climb to 4 per cent by the end of this year. And they point to the resilience and the recovery they’re seeing across the Australian economy. So they’re absolutely right that Omicron is hitting confidence. It’s having an impact on overall economic activity. But the fundamentals, Graeme, of the economy are sound, where the labour market is, what our growth prospects are, where business investment is. Of course we’ve seen strong housing investment off the back of programs like HomeBuilder. So overall we face challenges right now. We’re still in the middle of the pandemic. But Australians can be confident about their overall economic settings.
GRAEME GOODINGS:
Do you expect Omicron to impact the economy the way that Delta did?
JOSH FRYDENBERG:
Not as much as Delta because that was a very significant lockdown in our two largest states – New South Wales and Victoria. You know, 13 million Australians were basically confined to their homes. This time around with Omicron it’s 75 per cent less severe than Delta. It’s highly transmissible. People are away from work for a week as they isolate and they, you know, like my own experience, have the common symptoms of headaches or cold sweats and the like. But it’s not as severe, and the response does not need to be as severe as it was with Delta.
GRAEME GOODINGS:
It apparently is not as severe, as you said. But it is having a major impact on the workforce. Major supermarket chains have been hit hard.
JOSH FRYDENBERG:
Yes.
GRAEME GOODINGS:
We’re learning the hard way – the supply chain is pretty fragile. Are you concerned?
JOSH FRYDENBERG:
Well, there is real pressure on supply chains. In fact, I’m speaking to you today from a Coles distribution centre in Laverton which, you know, has the poultry and the fruit and vegetables that goes right around the state of Victoria and into Tasmania. And they’ve seen a large number of their workers absent as they’re recovering from COVID. And this is no different to what we’re seeing in the trucking industry, what we’re seeing in our abattoirs. But that’s why National Cabinet agreed to changing some of those isolation requirements to allow people to get back to work, and that’s why we’re looking at other measures to ensure that we can help these businesses get through what are going to be some difficult weeks.
GRAEME GOODINGS:
Yeah, the Prime Minister said one in 10 workers could be affected by COVID. That obviously would impact right across the community.
JOSH FRYDENBERG:
Absolutely. Well, Treasury analysis is that as we get to the peak that potentially could happen. And if schools and childcare centres were closed then that could potentially add an extra 5 per cent to the number of workers who are absent from the workforce as parents stay home to look after their kids. We don’t want to see that happen, and that’s why it’s really important that National Cabinet agree to that implementation plan around schools. Because we want parents to be at work if they’re physically able, and we want kids to be in the classroom interacting with their fellow students, improving their personal educational development and, of course, it’s going to be important for their mental health as well.
GRAEME GOODINGS:
When it comes to, you know, depleted numbers in the workforce, I was speaking to National Seniors last week, and they say there’s a ready and willing workforce among the recently retired. Many would love to work, but what’s holding them back is the fact that they can only earn $7,000 a year before they start to lose 50 cents in the dollar. Would you consider relooking at that?
JOSH FRYDENBERG:
Look, we’ve already made some changes there to enable and encourage more seniors into the workforce. We’re continuing to look at all our settings. And so that’s something that, you know, we continue to work through. Because seniors are an important part of the workforce. We’ve already made some changes around students. So international students have had the limitations on the number of hours that they can work lifted, and that’s going to help get more people back to the workforce as required.
GRAEME GOODINGS:
Under the current situation, of course, we can’t look overseas to bring in overseas workers. That’s just not going to happen.
JOSH FRYDENBERG:
Well, there are in the agricultural space the Pacific workers program. And obviously if we can bring in the international workers in a COVID‑safe way we will. And, of course, we’re skilling up our own workers for the many jobs that are available. Job ads have actually been at a very high level even after they’ve come down slightly as a result of Omicron. So there are jobs out there. We just need to get the workers to fill them. And moving through the next few weeks as those Omicron cases continue to rise is going to be a challenge.
GRAEME GOODINGS:
Finally, getting back to the tax cuts, Treasurer, when can we expect to see a little bit more in our pockets?
JOSH FRYDENBERG:
Well, people are seeing that now. And the good news is that we saw, you know, 11.7 million Australians get $15.5 billion in the last six months through personal income tax. That was the biggest set of tax cuts over a six‑month period in more than 20 years. And then we’ll see an extra $1.5 billion of tax cuts every month over the course of this financial year. So it’s actually happening now. And if you’re a teacher or you’re a nurse on $60,000, you’re paying $2,160 less tax this year than under Labor.
GRAEME GOODINGS:
Treasurer, thanks for your time today.
JOSH FRYDENBERG:
Good to be with you.